Crisis of Confidence

If Israeli Prime Minister Ehud Barak looks nervous these days, it's because his famous luck seems to be running out. He modeled himself after another lucky politician named Bill Clinton, and now he's paying for it.

Barak has never hidden his admiration for Clinton's political skills. Last year's successful Barak election campaign was lifted straight out of the Clinton playbook, from his expensive polls and rapid response teams to his "economy, stupid" message and his "New Labor," bash-your-own-party centrism. He even hired Clinton's campaign staff.

Now he's acquired Clinton's troubles, too. Barely a half-year in office, Barak faces a criminal investigation into suspected campaign finance abuses, and his enemies are howling for his head. Like Clinton, Barak will probably survive his crisis, but in a weakened state, shorn of public trust and the maneuvering room that goes with it. He could end up looking something like Clinton does today. That would make anyone nervous.

It's making other people nervous, too. The Israeli police investigation launched this week is the first-ever major probe of foreign money in Israeli politics. Technically illegal, the practice has been an open secret for years, touching every major party, providing an estimated $10 million to $15 million in recent elections.

Israeli press reports routinely detail politicians' "fundraising" meetings in America, listing attendees and describing what they ate. Every party is involved, though Likud, Labor and the ultra-Orthodox Shas are acknowledged champions.

"By and large the Likud outraises Labor among American Jews, because its people are more passionate," says Jack Bendheim, chairman of the New York-based Israel Policy Forum, a pro-Barak monitoring group. "Liberals tend to feel it's interfering in Israeli politics."

Activists here and in Israel say the practice is essentially an Israeli version of America's "soft money." It usually stays within the letter of the law, even while flouting the law's intent, by exploiting loopholes.

Donors may write checks directly to Israeli campaign vendors, like printers or busses. Or they may give tax-deductible gifts to Israeli non-profit groups -- yeshivas, clubs, social-service agencies -- which then provide "volunteers" for the cause.

What's odd about the current scandal is that it targets only a piece of the phenomenon, at least so far. Five Israeli parties are cited in the state comptroller's report that led to the police probe, but Barak's campaign is the main focus. It's accused of dodging spending limits by creating phony non-profit groups, covertly funded by foreign donors. The foreign donors are from Europe and Canada, not the United States.

Whether investigators will broaden their sights -- to other parties, other funding sources -- remains a mystery. That's why people are sweating. Even as is, the scandal has touched a nerve in Israel, igniting a crisis of confidence in Israeli democracy. Like Americans, Israelis are now outraged and frightened at the flood of money soiling their politics. And, like Americans, Israelis feel helpless to check it.

Coupled with a stunning string of other high-level financial scandals -- implicating Israel's president, the previous prime minister and the former head of the third-largest political party, Shas -- the Barak scandal has jolted Israelis' longtime cynicism about political ethics. Campaign finance, traditionally a yawner, suddenly looms high on the agenda. If America is any example, the issue could stay out front for some time.

America's last campaign finance scandals date to 1996, when the Clinton campaign was accused of a host of improprieties including foreign donations. Three years of congressional hearings turned up few indictable transgressions. Yet the stench of abuse still lingers. That should be a lesson to Israelis. These things don't disappear. They fester.

"What's happening in politics is geometric increases in the amount of money spent, and fewer and fewer citizens participating," says Democratic fundraiser Steve Grossman, former Democratic National Committee chairman and a onetime president of AIPAC, the pro-Israel lobbying powerhouse. "If you look at the multiple scandals in Israel and if you look at the situation here, there's a recurring theme," Grossman says, "and that is that politicians are driving away the very people they are trying to reach."

Citizens say it doesn't matter what they do, because at the end of the day the big money decides the issues."

America's frustration may now be reaching a critical mass. Campaign finance is emerging as a central issue in this year's presidential election. It's a key theme in Bill Bradley's Democratic insurgency. It's the whole theme of John McCain's Republican insurgency. It hovers as a constant reproach over the campaign of Vice President Al Gore, who barely escaped indictment in the 1996 Clinton scandals. And it pervades the campaign of George W. Bush, who's raised more money at this stage -- $68 million and counting -- than any candidate in history. All told, spending for this year's presidential and congressional campaigns is expected to top $3 billion, breaking the estimated $2.2 billion record set in 1996.

Fixing the system is another matter. The topic has become a political football, locking the parties into predictable positions dictated by self-interest. Democrats want restrictions on big gifts from corporate fat cats, most of which go to Republicans. Republicans want to stop political giving by labor unions, which generally benefit Democrats. "Neither party has any real interest in change," says Larry Makinson of the nonpartisan Center for Responsive Politics.

Nobody is in a tighter spot than the American Jewish community. As a subculture that uniquely combines affluence with liberalism, Jews are one of the few available sources of big money for Democrats. That, combined with a deep-rooted tradition of giving, results in a lopsided situation where Jews are the biggest single source of funding for Democrats. Though numbering 2.2 percent of the population, they provide an estimated 50 percent of Democratic finances in presidential campaigns and 25 to 40 percent overall.

That provides a lot of political clout. "We're so generous in our giving that under the current system we enjoy a good deal of influence," says Washington lawyer-lobbyist Morris Amitay, a former AIPAC executive director. "Looking at the broad question of whether you want to take money out of politics, that depends on whether you enjoy being pandered to. I know I do."

But for many big Democratic donors, the current system is untenable. It's corroding democracy. And it's putting ever-increasing pressure on a Jewish donor pool that isn't growing. "I think the state of Israel would do just fine if soft money were eliminated from politics," says Grossman, the former AIPAC president. "And I believe we have such a toxic situation here that we need to fix it regardless."

J.J. Goldberg writes a weekly column for The Jewish Journal

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